Book Keeping And Accounting

INTRODUCTION
 Accounting is the process of recording, classifying, selecting, measuring, interpreting and communicating financial data of an organization to enable interested users make decisions.

Accounting as the process of recording, identifying, analyzing, classifying, summarizing, measuring and communicating economic information to allow informed decisions by the users of the information.


An accountant must not only be interested in record keeping alone but in the application of his professional competency or knowledge and skill in presenting accounting information to assist management in decision making.

Book Keeeping
Book keeping is the systematic recording of transactions on a daily basis in the appropriate books. It is an integral part of accounting. Accounting is concerned with the use to which the book keeping records are put, the analysis and interpretation.

Book keeping is the process of recording data relating to accounting transactions in the accounting books.

Read Also: History of Accounting

IMPORTANCE OF ACCOUNTING AND BOOK KEEPING

1. Accounting information is useful in decision making.
2. It provides permanent records for all transactions. 
3. It helps to determine the profitability of a business concern.
4. It is used for tax assessment.
5. It helps in preventing fraudulent practices.
6. The record shows both the income and expenditure.
7. The record provides a means by which finances of a business are controlled.
8.  Accounting records show the assets and liabilities.

DIFFERENCES BETWEEN BOOK KEEPING AND ACCOUNTING
Book Keeping should not be confused with accounting. The process of accounting begins where the Book keeping ends. We can say that a Book-keeper is to the Accountant just as a Nurse is to the Medical Doctor.

	BOOK KEEPING	ACCOUNTING
1.	It is basis for accounting.	It is basis for business knowledge.
2.	Persons responsible are called Book keepers	Persons responsible are called accountants
3.	It is recording phase.	It is interpreting and summarizing phase.
4.	Financial statements are not prepared from records.	Financial statements can be prepared from accounting records.
5.	It cannot give a complete picture of the financial status.	It gives a complete and clear picture of the financial status.
6.	It cannot help in making decisions.	It helps in making decisions.
7.	It does not require any special skill.	It requires special skills and knowledge.

USERS OF ACCOUNTING INFORMATION

1.  Managements
2. Employees
3. Owners
4. Banks
5. Creditors
6. Analysts
7. Competitors
8. Government
9. Tax authorities
10. General Public.

 QUALITIES OF ACCOUNTING INFORMATION
1. Timeliness
2. Reliability
3. Verifiability
4. Relevance
5. Predictability of values
6. Comparability
7. Comprehensiveness

Read Also: Ethics of Accounting You Need To Know

LIMITATIONS TO ACCOUNTING INFORMATION
1. There is no information as to usefulness, size or quantity because accounting information is expressed in monetary terms.
2. Accounting information is historical in nature.

BENEFITS OF BOOK KEEPING AND ACCOUNTING
1. It facilitates reference making to past transactions.
2. It facilitates inter-firm comparison.
3. It shows purchases and sales made within a given period.
4. It provides a written record which is important for proper conduct of business.
5. The existence of reliable financial records helps management in decision making.
6. Proper record keeping makes it possible to find out how a business stands in relation to its customers.
7. Good book-keeping practices enables one to ascertain the profit or loss made during a trading period.

STAGES OF ACCOUNTING
The accounting cycle is the collection of the three stages of accounting. The entire accounting cycle process takes place over the period of one month. The same accounting process is repeated in its entirety each month. The order of stages of accounting are: data collection, data processing and reporting.